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China boosts ties in Latin America while US dithers

03 January 2018 - 13:50
Carlos Torres and Randy Woods

China flags. Picture: REUTERS

Washington — China’s emergence as a global economic rival to the US is perhaps most obvious in Latin America.

In recent years the US has lost its status to China as the top trading partner in parts of Latin America, such as copper-rich Chile and agriculture and mining powerhouse Brazil. Now, all the uncertainty surrounding US President Donald Trump’s plans — from building a southern border wall, to refreezing Cuba relations and exiting the Paris climate change accord supported by Latin America — could give an opening for China to seize more ground in the region.

Meanwhile the Chinese government is ready to expand its dominance in a region already supplying its expanding economy with everything from farm goods to raw materials.

China surpassed the US as Brazil’s largest export market in 2009, as South America’s biggest economy stepped up shipments of everything from iron ore to soya beans. A year later China became Latin America’s leading trade partner, when you omit Mexico and take into account only the South American nations.

"China has successfully established a really remarkable economic presence in the region over a relatively short period of time," said Margaret Myers, director of the Inter-American Dialogue’s Latin America and the world programme.

Mexico is an exception that still looks to the US for most of its commerce, thanks in some measure to the North American Free Trade Agreement’s (Nafta’s) zero-tariffs regime. The country’s exports to the US totalled $303bn in 2016 compared with just $5.4bn to China.

But China’s encroachment in the region could accelerate if Trump makes good on threats to withdraw from Nafta, which would result in higher tariffs between Mexico and the US. Mexico is already making contingency plans to increase trade with other nations in case the trade pact dissolves.

That doesn’t mean China would completely benefit from a souring of US-Mexico relations. China largely seeks commodity imports from Latin America, whereas Mexico’s biggest exports to its northern neighbour are cars and car parts as well as electronics — items that China already produces in abundance.

But the dissolution of Nafta could create a vacuum in Mexico that China would try to at least partially fill.

"Certainly Mexico will be interested in collaborating more with China" — as well as other countries — if Nafta ends," said R Evan Ellis, a professor of Latin American studies at the US Army War College.